* Mitsui raises FY2016/17 net profit estimate to Y220 bln
* Sees coking coal prices falling in Jan-March quarter
* Expects "progress" on Mozambique LNG project by end-March (Adds detail, quotes)
By Yuka Obayashi
TOKYO, Nov 2 (Reuters) - Japanese trading company Mitsui & Co 8031.T raised its full-year profit forecast by 10 percent on Wednesday as surging coking coal prices helped to boost earnings from metals assets.
Premium hard coking coal prices .PHCC-AUS=SI in Australia, which dominates global exports, rose above $258 a tonne this week, lifting this year's rally to more than 200 percent after China moved to cut overcapacity in its coal sector. which last year booked its first annual loss since being established in 1947, now expects a consolidated net profit of 220 billion yen ($2.13 billion) for the year to March 31, up from its previous forecast of 200 billion yen.
"Soaring coal prices will likely boost net profit in metals by 30 billion yen from our previous forecast to 75 billion yen," CFO Keigo Matsubara told a news conference.
However, Matsubara said that the strength in coal prices to be short-lived, citing Chinese moves to soften its regulations.
"Our assumption of coal prices for this quarter is near the current spot levels, but we expect a drop in the next quarter," he said.
China's state planner has urged coal miners to speed up the pace of output increases to tame the spike in prices, two sources said, in the latest sign that Beijing is concerned about dwindling supplies ahead of the winter. which owns large iron ore assets, predicted that October-March prices of the steelmaking material would slide below current levels and be flat against April-September prices.
The company said that cost cuts in energy operations and the sales of part of its stake in Malaysian hospital operator IHH Healthcare, reducing its holding from 20.1 percent to 18.1 percent, also contributed to the revised profit forecast.
Its forecast for average copper prices for the year to March 31 was trimmed to $4,700 a tonne, from a previous estimate of $5,500.
Asked about Mitsui's LNG project in Mozambique, Matsubara said the company expects "certain progress" by the end of March but gave no further detail.
He told Reuters after the news conference that no decision has been made on the future of the Hazelwood coal-fired power plant in Australia, in which Mitsui holds a 28 percent stake.
The 1.5 GW plant, which produces 5.4 percent of Australia's power, is one of the world's most polluting power stations, environmental groups say. ($1 = 103.3900 yen) (Editing by Clarence Fernandez and David Goodman)